Absolute carbon corrupts absolutely  

Ian Dunlop has an article at the ABC looking at the influence of the fossil fuel industry on climate change policy in Australia - Absolute carbon corrupts absolutely.

The resource industries wield enormous power in Australia and their opposition to action on human-induced climate change is well documented.

At virtually every turn in the tortuous path of climate reform over the last two decades, resource interests have prevailed without regard to the increasing risk of catastrophic climate impacts. Gradually, as the evidence has mounted, outright denial has given way publicly to grudging lip service to the need for action, whilst privately delaying tactics continue.

The scientific consensus that, on the balance of probabilities, human activity is causing most of the warming occurring globally, is overwhelming. 

Prudent risk management suggests that an emergency response is now required.

To have a 50 per cent chance of not exceeding the “official” limit of 2 degrees Celsius global temperature increase relative to pre-industrial levels, Australia must stop emitting carbon completely in around eight years. This constraint only allows around 50 per cent of existing global fossil-fuel reserves to be consumed. So why continue expanding reserves of oil, gas and coal, with increasingly risky, and environmentally damaging, ventures such as deepwater oil exploration, tar sands, shale oil and underground coal gasification?

It begs the question whether the power of the resource industries is being used responsibly, or is this a case of “power tending to corrupt and absolute power corrupting absolutely”?

Buoyed by bullish demand forecasts, the resource sector is forging ahead with fossil fuel developments, doubling coal exports, expanding LNG exports, creating a coal seam gas industry - but with no proven means of sequestering the associated carbon emissions.

The supposed justification is that developing nations such as China and India, require our cheap resources to lift millions out of poverty, irrespective of their climate change impact. But fossil fuels are not cheap. Their real cost is only just becoming evident as the economic damage and human suffering caused by the upward trend of extreme weather events around the world demonstrates – for example in the USA, Russia, China, India and Pakistan this year alone.

The lack of accounting for these impacts represents “the greatest market failure the world has ever seen”; pricing carbon is not the imposition of a “great big new tax”, rather it is the removal of a “great big old subsidy”, a subsidy which is the major barrier to establishing low-carbon industries.

China and India are well down the track developing these industries, far more so than Australia. As the true cost of climate change hits home, their transformation away from fossil-fuels will accelerate, notwithstanding that they continue to make substantial fossil-fuel investments in the short term.

This should be cause for caution. Instead, the boosters are continually talking up the prospects of developing increasingly remote resources, and costly conversion technologies; fortunes are being made trading assets for inflated prices on which to build projects which will be largely uneconomic once the true price of carbon is incorporated.

But when national priorities, driven by escalating natural disasters, take precedence over short-term profit, authoritarian regimes such as China will change direction very fast. This is a world for which Australia is ill-prepared, as the hypocritical stance of our resource industries demonstrates.

Key industry players publicly proclaim that climate change is real and requires urgent action to reduce emissions. But the expansion of the coal industry is predicated on the success of carbon capture and storage (CCS) technology, which we are asked to take on faith by allowing mines and power stations to be built before these technologies are proven at the enormous scale now required. Unfortunately there is virtually no chance CCS will provide the hoped-for panacea to cut emissions in the time frame needed.

At the same time, the industries fight tooth and nail to prevent the introduction of a realistic carbon price, the lack of which undermines the viability of CCS, whilst excessive compensation rung out of a weak government dampens low-carbon technology innovation. The net effect is continuing rapid growth in carbon emissions, completely at odds with industry rhetoric.

The major investment required to transform Australia into a low-carbon economy should come in part from the super profits generated from the use of our non-renewable resources. However the rabid reaction against the proposed resource tax, suggests an industry hell-bent on preserving the status quo, rather than promoting the sustainable pathways which feature so prominently in company reporting. A sensible resource tax makes good sense for both industry and the community, and “sensible” means far more than the royalty replacement kite recently flown by Clive Palmer!

This is the context in which the recent comments by BHP Billiton CEO Marius Kloppers should be judged. Finally, a CEO of a major resource company has had the courage to publicly state what has been obvious for some time – human-induced climate change is a serious problem and we need a price on carbon to have any chance of addressing it. All credit to him for taking this long-overdue leadership position. But publicly crossing that threshold carries with it fiduciary responsibilities which he did not acknowledge in his speech.